Why earnings might actually start to mean something

The fire hose of earning reports gets turned on this week, with fourth quarter reports coming from six Dow components and 26 S&P 500 companies. And with the Federal Reserve looking to take a less active role in 2014, the results could start to matter much more to stock prices than they did over the course of 2013.

"Last week was noteworthy in the markets' response to earnings, in the context of a potentially less friendly Fed, which will lower the tolerance level for any hiccups in company performance," Lindsey Group chief market analyst Peter Boockvar wrote in a Monday note. "Those that missed were punished, such as Bed Bath & Beyond and Alcoa, but those that delivered were rewarded, such asMicron and Macy's. That seems perfectly logical, but we know misses in 2013 were mostly glossed over."

2013 saw a slowdown in both earnings and revenue beats. For Q1 through Q3, 71 percent of companies beat earnings estimates, and 51 percent beat revenue estimates, according to FactSet. That compares with an average of 73 percent earnings beats and 59 percent revenue beats over the past four years.

The emphasis on financials could actually make initial results look relatively strong. The financial sector is projected to grow earnings by 23 percent year over year, the most of any sector, according to FactSet. (On the other hand, the sector is also projected to report a 10 percent revenue decline.)

So far, however, companies have reported mixed results—and the divergent stock price outcomes these results have yielded speak volumes for Boockvar. He argues that the Fed's quantitative easing program made investors shrug off any bad news in 2013, but believes the age of "Teflon markets" could be ending in 2014, as the Fed tapers its monthly bond buying.

Investors "wake up one morning to realize we're at valuation levels that actually demand some follow-through from corporate results," said Colas, chief market strategist at ConvergEx group.

He points to a price-to-earnings multiple on the S&P 500 that rose from 13.5 to 16.3 over the course of 2013, meaning that investors are paying much more for earnings.

"Most of the stock market's return was on P/E multiple expansion, plus confidence in the recovery and Fed stimulus," Colas told CNBC.com. "Against that backdrop, it becomes much more important for companies to meet earnings—both in the aggregate and on a company-specific level."

Colas argues that any given company will not be allowed to be as complacent when it comes to the impact of earnings on its stock price.

"A year ago, the stock market was trading at a discount, and you were trading at a discount. And let's not forget that you missed earnings last year," he said. "Given that the stock market was up 30 percent last year and you didn't make your numbers, you might want to be reconsider that complacency."

"I think earnings will start to matter more this quarter than the last three," Grisanti agreed. "If earnings start to come in bad, then we're getting a little toppy here, and we're probably about to get the correction we've all been waiting for."

For Colas, the broader lesson is that even positive earnings and economic results might not be enough to take stocks higher in 2014.

"This is just one microcosm of why stocks just churn here," he said. "The stock market is a discounting mechanism, and we're seeing signals that the market has already figured out that this is a good year. Now investors are putting a question mark on data and earnings and saying, 'Now what?'"